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Gilead Buys Calistoga Pharma for $375M, Making Move Into Cancer Drugs

Gilead Sciences is the world’s biggest maker of HIV medications, and today it’s making a big move to diversify into the cancer drug field by acquiring Seattle-based Calistoga Pharmaceuticals.

Foster City, CA-based Gilead (NASDAQ: GILD) said today it has agreed to pay $375 million to acquire Calistoga, plus another $225 million if certain milestones are reached, bringing the total potential price tag to $600 million.

Calistoga has been building an increasing amount of buzz in the cancer R&D world over the past couple years for a drug made to block a hot biological target known as the PI3 kinase pathway. The company, which spun off with technology from Bothell, WA-based Icos in 2006, has raised more than $90 million since its founding from Alta Partners, Amgen Ventures, Frazier Healthcare Ventures, Three Arch Partners, Latterell Venture Partners, and Quogue Capital.

The bet at Calistoga was that it had found a way to specifically target a certain subtype of the PI3 kinase, known as the delta isoform. That meant it should have a better combination of safety and effectiveness than other PI3K inhibitors in the field of certain blood cancers like leukemias and lymphomas, CEO Carol Gallagher has said. Data supporting Calistoga’s lead drug designed this way, CAL-101, continued to mount the past two years at a series of medical meetings.

The most recent presentation came in December at the American Society of Hematology in Orlando, FL, in which Calistoga reported that after more than 177 patients enrolled in its first major study, its drug was keeping tumors from spreading more than a year among patients with chronic lymphocytic leukemia, and slow-growing “indolent” non-Hodgkin’s lymphoma. That paved the way for a new clinical trial that Calistoga has been designing to be rigorous enough to win FDA approval.

Carol Gallagher

Gilead, which has long sought to diversify its revenue streams beyond its HIV franchise, has made a couple other acquisitions in the past year—Palo Alto, CA-based Arresto Biosciences for $225 million, plus future milestones, and Branford, CT-based CGI Pharmaceuticals for as much as $120 million. Arresto was developing a treatment for idiopathic pulmonary fibrosis, while CGI was targeting inflammatory diseases. Calistoga’s primary focus is cancer, although Gallagher has said the company’s approach has potential against autoimmune diseases as well.

“Oncology remains an area of significant unmet medical need and our increased understanding of the genetic basis of cancer allows for the development of disease specific targeted therapies. We are very encouraged by emerging clinical data for CAL-101, and this compound could represent an advance,” Norbert Bischofberger, Gilead’s chief scientific officer, said in a statement.

I’ve followed the Calistoga story closely since Gallagher joined the company in the fall of 2008, and will be sure to follow up in these pages with more details as I hear them.

Yay, yet another homegrown Seattle startup gets swallowed up by some big corporation based elsewhere! Seattle’s march toward becoming the City of Regional Offices with No Locally Based Businesses ™ continues!